*SAN ANTONIO TRACTION COMPANY,

Plff. in Err., v.

GEORGE A. ALTGELT.

(See S. C. Reporter’s ed. 304-310.)

control — power to charter street rail¬ way. — The power to charter a street rail¬ way was not withdrawn from the legislature by Tex. Const. 1876, art. 10, § 7, provid¬ ing that “no law shall be passed by the legis¬ lature, granting the right to construct and

Note. — As to the power of the legislature to impose burdens upon municipalities and to control their local administration and property — see note to State ex rel. Bulkeley v. Williams, 48 L.R.A. 465.

On legislative power to fix tolls, rates, or prices — see note to Winchester & L. Tump. Road Co. v. Croxton, 33 L.R.A. 177.

On contract exemptions from legislative power to fix tolls, rates, or prices — see note to Detroit v. Detroit Citizens' Street R. Co. 46 L. ed. U. S. 592.

491

304, 305

Supreme Court of the United States.

Oct. Term,

operate a street railway within any city, town, or village, or upon any public highway, without first acquiring the consent of the local authorities having control of the street or highway proposed to be occupied by said railway,” but such power still exists, pro¬ vided the consent of the local authorities be first acquired.

contract obligations — legislative reg¬ ulation of street railway rates. — The

requirement that street railway companies shall issue half-fare tickets to school chil¬ dren, which is made by Tex. act April 10, 1903, § 2, does not impair the obligation of any contract with the municipality, fixing' the rates which such company might charge, entered into after the adoption of Tex. Const. 1876, which, by § 17 of the Bill of Rights, subjects to the control of the legislature all privileges and franchises granted by it or created under its authority.

S. Constitutional law — impairment of contract obligations — legislative reg¬ ulation of street railway rates. — Any contract exemption from legislative regula¬ tion of rates, possessed by a street railway company chartered before the adoption of the Texas Constitution of 1876, which, by § 17 of the Bill of Rights, subjects to the control of the legislature all privileges and fran¬ chises granted by it or created under its authority, was lost by the sale of its property on foreclosure, and the acquisition of its franchise, under a municipal ordinance, to¬ gether with that of another company, by a new corporation, incorporated since the adop¬ tion of such Constitution, although such or¬ dinance provides that all the rights and privileges previously granted to the old cor¬ porations were conferred on the new one, Including all the limitations, contracts, and obligations.

[No. 131. J

Argued December 13, 1905. Decided Jan¬ uary 22, 1906.

IN ERROR to the Court of Civil Appeals for the Fourth Supreme Judicial District of the State of Texas to review a judgment affirming a judgment of the District Court of Bexar County, awarding a peremptory mandamus to compel a street railway com¬ pany to issue half-fare tickets. Affirmed.

See same case below (Tex. Civ. App.) 81 S. W. 106.

Statement by Mr. Justice Brown;

This was a petition by Altgelt, suing by his next friend, originally filed in the dis¬ trict court of Bexar county, for a peremp¬ tory mandamus against the .traction com¬ pany, a Texas corporation operating a street railway system, commanding it to issue to the plaintiff twenty half-fare street car tickets upon the payment of 50 cents, the same being at the rate of 2 y2 cents per ticket.

41

Both parties relied upon the legal effect of certain legislation of the state of Texa3 hereafter set forth. The mandamus was granted by the district court, whose action was affirmed by the court of civil appeals. An application for a writ of error from the supreme court was denied.

Mr. Charles W. Ogden argued the cause and filed a brief for plaintiff in error:

The power to grant to street railways the property right and franchise to construct and operate a street railway within a city is withdrawn from the legislature by Tex. Const. 1876, art. 10, § 7, and conferred, if not by expressed words, then by necessary implication, upon the municipal author¬ ities.

Houston v. Houston City Street R. Co. 83 Tex. 545, 29 Am. St. Rep. 679, 19 S. W. 127 ; Detroit v. Detroit Citizens’ Street R. Co. 184 U. S. 369, 46 L. ed. 595, 22 Sup. Ct. Rep. 410; Taylor v. Duhn, 80 Tex. 659, 16 S. W. 732.

A franchise granted by municipal author¬ ities in the exercise of a power conferred directly by the Constitution cannot be destroyed or impaired by the legislature because and for no other reason than that the same Constitution which vested this particular power in the municipal body re¬ served to the legislature the power to con¬ trol the privileges granted by it or under its authority.

Detroit v. Detroit Citizens’ Street R. Co. 184 U. S. 368, 46 L. ed. 592, 22 Sup. Ct. Rep. 410; City Water Co. v. State, 88 Tex. 600, 32 S. W. 1033.

The exclusive power conferred by § 7 of article 10 of the Constitution of Texas upon the city authorities to control the use of the streets of the city by street railway companies necessarily involves the right to enter into a contract with a street railway company, imposing upon it such burdens and obligations, and conferring upon it such rights and privileges, including the right to collect a stipulated fare, as the parties to the contract may agree upon.

Detroit v. Detroit Citizens’ Street R. Co. supra.

No counsel for defendant in error.

*Mr. Justice Brown delivered the opin-

ion of the court:

This case depends upon the construction and validity of certain legislative acts of

the state of Texas from 1874, the date of

the original charter, to 1903, the date of

the act complained of as an impairment of the traction company’s contract.

The Constitution of 1869, in force at the time the original company was chartered, contained no limitation upon the power of

200 U. S.

Sait Antonio Traction Co. v. Axtgelt.

305-307

the legislature to grant franchises in towns, cities, and other subdivisions of the state. The San Antonio Street Railway Company was incorporated in 1874 by special act, in which it was provided, § 8, that “all contracts made and entered into between the mayor and aldermen of the city of San Antonio and said company, or any privileges and rights granted ... to said company, shall be in all respects legal and binding on the aforesaid contracting parties;” and by § 9, that the charter “shall remain in full force and effect for the period of fifty years.”

By ordinance of the city council of Oc¬ tober 5, 1875, privilege was granted to the San Antonio Street Railway Company to construct a first-class horse railway, dur¬ ing the term of its charter, upon the streets of said city, upon certain routes; but the ordinance did not fix the rate of fare to be charged for the transportation of per¬ sons over its projected lines.

By article 10, § 7, of the Constitution of Texas of 1876, it was provided that “no law shall be passed by the legislature granting the right to construct and operate a street railway within any city, town, or village, or upon. any public highway, with¬ out first acquiring the consent of the local authorities having control of the street or highway proposed to be occupied by said railway.”

Section 17 of article 1 of the Bill of Rights of the same Constitution provides that “no irrevocable or uncontrollable grant of special privileges or immunities shall be made; but all privileges and franchises [3 06] granted by the legislature, or *created under its authority, shall be subject to the con¬ trol thereof.”

On March 16, 1899, twenty- three years after the adoption of this Constitution, an ordinance of the city was passed, granting an extension of time to the San Antonio Street Railway, and the San Antonio Edi¬ son Company, and imposing certain lim¬ itations upon the exercise of their fran¬ chises, among which was that “said street railway companies shall charge 5 cents fare for one continuous ride over any one of their lines, with one transfer to or from either line to the other.”

It was also provided, by § 11 of the same ordinance, that “the rights, privileges, and franchises, or either of them herein referred to and hereby extended, may be assigned by the grantee or grantees to any person or corporation, and the limitations of this ordinance shall apply to the assignee thereof.”

On April 4, 1900, all the property of this company was sold under the decree of a state court to a trustee for the stock-

200 U. S.

holders, subject to the payment of the debts of the company, and to the performance of all outstanding contract obligations, which were declared “a preference lien” against all the property sold in the hands of the purchaser. The conveyance expressly stipulated that “within the meaning of the words ‘contract obligations’ shall be under¬ stood any and all existing contracts of the said Antonio Street Railway Company for street railway service over its road, or any portion thereof, had with any person or persons, now binding on said street rail¬ way company.”

On August 7, 1900, the common council of the city passed an ordinance reciting the sale of the pro'perty and privileges of the former corporations, the San Antonio and Edison Companies, to the traction company, and enacting that all the rights and privileges theretofore granted to the former companies, which were said to be “now defunct,” with all the limitations, duties, contracts, and obligations imposed and required of the said San Antonio Street Railway Company, were “imposed upon the

traction company. This, ordinance was ac¬ cepted.

The legislation remained in this condi¬ tion until April 10, 1903, when the legis¬ lature of the state passed a new act, the 2d section of which reads as follows:

“Sec. 2. All such persons or corporations owning or operating street railways shall sell or provide for the sale of tickets in lots of twenty, each good for one trip over the line or lines owned or operated by such person or corporation, at and for one half the regular fare or charge collected for the transportation of adult persons, to students not more than seventeen years of age, in actual attendance upon any academic pub¬ lic or private school, of grades not higher than the grades of the public high schools of this state, situated within or adjacent to the town or city in which such street railway is located. Such tickets are re¬ quired to be sold only on the presentation by the student desiring to purchase the same, of the written certificate of the prin¬ cipal of the school upon which he is in attendance, showing that he is not more than seventeen years of age, is in regular attendance upon such school, and is within the grades hereinbefore provided. Such tickets are not required to be sold to such students, and shall not be used, except dur¬ ing the months of the year when such schools are in actual session, and such stu¬ dents shall be transported at half fare only upon the presentation of such tickets.”

It is insisted by the plaintiff in error that, under article 10, § 7, of the state Constitution, above quoted, the power to

493

307-310

Supreme Court of the United States.

Oct. Term,

grant to street railways the property rights and franchises to construct and operate a street railway within a city is withdrawn from the legislature, and conferred, if not by express words, then by necessary impli¬ cation, upon the municipal authorities. We do not so read the section. It merely provides that no such law shall be passed by the legislature, granting the right to construct and operate a street railway, without first acquiring the consent of the local authorities; but we see nothing to prevent the legislature from chartering a

street railway, “provided such consent be acquired. Such ' we understand to be the ruling of the supreme court of that state in Taylor v. Dunn, 80 Tex. 659, 16 S. W. 732, and Houston v. Houston City Street R. Co. 83 Tex. 548, 29 Am. St. Rep. 679. 19 S. W. 127. But whether an act of the legislature be necessary to charter a street railway is not involved in this case, as we are cited only to the original charter of the San Antonio Street Railway Company of 1874; although it is clear that a new char¬ ter would be inoperative to authorize the construction of the road without the con¬ sent of the municipal authorities.

Assuming, but not deciding, that the or¬ dinance of March 16, 1899, extending the franchise of the San Antonio Street Rail¬ way, and imposing certain limitations, con¬ stituted a contract pro tanto the question still remains whether the provision “that said street railway companies shall charge 5 cents fare for one continuous ride over any one of their lines, with one transfer to or from either line to the other,” con¬ stituted a contract with respect to which no further legislation upon that subject could be enacted without impairing its ob¬ ligation. Even if construed as a contract, it was still subject to the provision of the Constitution of 1876, which, in § 17 of the Bill of Rights, declared that no irrevocable or uncontrollable grant of special privileges or immunities should be made; but that all privileges granted by the legislature or created under its authority shall be sub ject to the control thereof.

An important consideration in this con¬ nection is that the alleged contract was made twenty-three years after the Consti¬ tution of 1876 was adopted, declaring that all privileges granted by the legislature shall be subject to its control. Clearly, it was not deprived of that control by the fact that the contract was not entered into by the legislature itself, but by a municipal corporation, since that is but an agency of the state, to which is delegated the power to regulate street railways and other municipal franchises. We have repeatedly held that where a railway was originally 404

chartered before a new constitution took effect (and hence such charter was not lim¬ ited “thereby), yet, if such road be sub-

sequently consolidated with other roads, or accepts new privileges, after a new consti¬ tution takes effect, all contracts, privileges, and franchises conferred after the adoption of such constitution are subject to its pro¬ visions. Shields v. Ohio, 95 U. S. 319, 24 L. ed 357; Maine C. R. Co. v. Maine, 96 U. S. 499, 24 L. ed. 836; Atlantic & G. R.

Co. v. Georgia, 98 U. S. 359, 25 L. ed. 185; Keolculc & IF. R. Co. v. Missouri, 152 U.

S. 301, 38 L. ed. 450, 14 Sup. Ct. Rep. 592;

Yazoo <£- M. Valley R. Co. v. Adams, 180 U. S. 1, 23, 45 L. ed. 395, 407, 21 Sup. Ct.

Rep. 240.

In this case not only did the original San Antonio Street Railway Company be¬ come extinct by the foreclosure and sale of its property, but, under the ordinance of August 7, 1900, declaring the prior com¬ panies to be “now defunct,” the traction company also became the owner of all the property, assets, rights, and privileges of another company, known as the San An¬ tonio Edison Company, which thus became absorbed with the street railway company in the new corporation known as the trac¬ tion company, which is admitted to have been incorporated since 1876, though the charter is not in the record. We are clearly of the opinion that, under these circumstances, it received its franchise under the Constitution of 1876, which for¬ bade either the legislature or the municipal authorities to make any irrevocable con¬ tract.

It is true that in this ordinance it was provided that all rights and privileges pre¬ viously granted to the street railway com¬ pany and the Edison company were con¬ ferred unto the traction company, includ¬ ing all the limitations, contracts, and obli¬ gations ; but this ordinance must be con¬ strued in connection with the Constitution of 1876, which made all such privileges and franchises subject to the control there¬ of. Such was the view taken by the court of civil appeals of Texas in this case, which expressly waived the question whether the provision of the former ordinance fixing a 5 cent fare constituted a contract or not, declaring that if it did, it was subject to further legislative control.

Under the Bill of Rights of that Constitu¬ tion, the legislature could not reduce the fares to a confiscatory amount, or to an “amount which would render it unprofitable [3 10] to operate the road. There is no allegation of that kind in this bill, and no evidence that the reduction of the school tickets in question would seriously impair its rev¬ enues. Indeed, it was found in the opinion

200 U. S.

Hibebnia Sav. & L. Soc. v. San Fbancisco.

310, 311

of the court below that it was not con¬ tended there, and that there was nothing in the evidence tending to show, that the rate of fare claimed by the appellee under the act of 1903 is not such as to leave to the company a sufficient income to pay for repairs and a fair income on its invest¬ ment.

The judgment of the Court of Civil Ap¬ peals is affirmed.